Questions regarding REO Bank Addendum

[Matt M.]

I'm new at this and just got my first accepted offer on a REO off the MLS. The bank is Wells Fargo but all offers were required to be done through www.williamsauction.com.  I received their packet yesterday and only have until this coming Monday morning to return the completed package.  The bank's addendum is quite lengthy and has quite of few items of concern. Now I've heard banks will not negotiate on their addendum but there's two sections that concern me most.  The first, the bank does not guarantee the type of deed provided and only guarantees insurable title but not marketable title.  My other concern is having no recourse on right of redemption, so if the previous owner exercises his right after closing, I'm **** out of luck.

So, my question is "Has anyone experienced these issues with a bank addendum regarding an REO purchase and how did you handle it? Did you walk? And, if not, how did you mitigate your risk?"

[Ryan Gillette]

I've bought a couple of Fannie REO - my clients buy all kinds but they always get insurance. Usually the issues get handled and if there's any risk or unclear title, it goes to the title insurer and they accept the risk or don't. The only risk I can see is if you're not getting title insurance or there's something that would make a potential buyer's title insurer wary when you go to sell one day. If a reputable title insurer says "We're ok with it", usually it's something ten years later another title insurer will say ok.